The information required to complete the Free Application for Federal Student Aid should be readily available if a student or her family have completed their income tax forms for the year. The money disclosed on the FAFSA includes income and assets the student has earned or owns. The parent's income and assets are reported only if the student is considered a dependent on the parent's income tax.
Adjustable Gross Income
Adjustable gross income is the same amount entered as adjustable gross income on income tax form 1040, form 1040A or form 1040EZ. The line item for each form changes from year to year and will be indicated on the FAFSA instructions. This amount is arrived at per the instructions that accompany each IRS form and may include the total amount of line 1 of an applicant's W-2 forms, tip income not reported to an employer or disability pensions shown on Form 1099-R.
Untaxed income is income not required to be taxed per IRS regulations. According to the FAFSA worksheet this includes child support, payments made to tax-deferred savings or pension plans and IRA payments and deductions made to self-employed Keogh, SEP or SIMPLE plans. Worker's compensation, disability payments and housing, living allowances or food received by military personnel or the clergy are also considered untaxed income. Students must report cash given to them by friends or relatives (but not parents if the student is a dependent) which includes the paying of utilities or other assistance that is indirect.
Any foreign income earned by the applicant must be reported on the FAFSA. All amounts of income must be converted into U.S. dollars when reported on the FAFSA. The exchange rate in effect the day the FAFSA is submitted is considered the current exchange rate for the purposes of the FAFSA.
Completing a FAFSA also requires listing any supplemental or assistance income received by the applicant. This includes food stamps, supplemental security income referred to as SSI and TANF or WIC payments. The FAFSA worksheet notes that some states may refer to TANF and food stamps by different names. For accuracy on the FAFSA application, the applicant can call the federal aid hot line to discover what the student's state calls these programs.
Additional Student Income
Applicants who are students at the time of filling out the FAFSA must include income from need-based employment. This includes work-study, fellowship and teaching assistant income and grants and award money. Money earned through combat pay, special combat pay and cooperative education programs must also be included.
Savings, Cash and Checking Accounts
The current amount of cash in all savings and checking accounts less any financial aid money in those accounts are requested on the FAFSA. The amounts reported should be the balance on the day the FAFSA is submitted. This includes all accounts for the applicant and if applicable, both parents.
Business and Farm Assets
Businesses must employee more than 100 people to be included in this category. The value of land, equipment, inventory and buildings owned by the business or farm are included in figuring its value. Small family-owned and managed businesses are not part of this income group. Investment farms are farms where the student does not reside or have an investment in the farm. The current value of the investment must be figured less the current debt owed on the investment.
Although the actual income from a family or student's investments is reported via an income tax return, filling out the FAFSA requires a list of each investment's current net worth. The net worth is figured by finding the current value and subtracting the current debt owed on the item. Investments include trust funds, rental properties, land, second homes and financial instruments such as stocks, bonds and certificates of deposit. A value of a primary residence is not included in this category.
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